TSMC Reports Q1 Gross Margin of 66.2%, Exceeds Expectations
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 hour ago
0mins
Should l Buy TSM?
Source: stocktwits
- Earnings Highlights: TSMC reported a net income of NT$572.48 billion ($18.14 billion) in Q1, surpassing Wall Street's estimate of NT$553.4 billion, showcasing the company's robust performance and solidifying its leadership in the semiconductor industry.
- Margin Guidance: The company forecasts a gross profit margin between 65.5% and 67.5% for Q2, reflecting effective strategies in cost control and balancing customer demand, potentially laying the groundwork for future profit growth.
- CapEx Plans: TSMC expects FY26 capital expenditures to reach the upper limit of $56 billion, indicating a strong commitment to expansion and technological investment aimed at meeting the surging AI demand and market competition.
- Positive Market Reaction: Needham raised TSMC's price target from $410 to $480, implying nearly a 32% upside, reflecting analysts' strong confidence in the company's future performance, despite the stock dropping over 2% in early trading.
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Analyst Views on TSM
Wall Street analysts forecast TSM stock price to fall
8 Analyst Rating
7 Buy
1 Hold
0 Sell
Strong Buy
Current: 375.100
Low
63.24
Averages
313.46
High
390.00
Current: 375.100
Low
63.24
Averages
313.46
High
390.00
About TSM
Taiwan Semiconductor Manufacturing Co Ltd is a Taiwan-based integrated circuit foundry service provider. The Company is primarily engaged in integrated circuit manufacturing services. It offers advanced process technologies, specialised process solutions, advanced photomask and silicon stacking, and packaging-related technologies, while supporting a comprehensive design ecosystem. The Company's products serve diverse electronic sectors including artificial intelligence, high-performance computing, wired and wireless communications, automotive and industrial equipment, personal computing, information applications, consumer electronics, smart internet of things, and wearable devices.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
TSMC Reports Strong Q1 Earnings Exceeding Expectations
- Earnings Beat: TSMC's Q1 GAAP EPS of $3.49 surpassed expectations by $0.11, indicating robust performance in the semiconductor market and likely boosting investor confidence moving forward.
- Significant Revenue Growth: The company reported Q1 revenue of $35.9 billion, a 40.6% year-over-year increase, exceeding market expectations by $410 million, reflecting strong global demand for high-performance computing and AI chips, driving sustained growth.
- Advanced Process Revenue Share: Shipments of 3nm, 5nm, and 7nm technologies accounted for 25%, 36%, and 13% of total wafer revenue, respectively, with advanced technologies (7nm and above) making up 74% of total revenue, showcasing TSMC's competitiveness in the high-end market.
- Optimistic Market Outlook: With ongoing demand for AI, TSMC is expected to continue reporting strong quarterly results, fostering a positive market sentiment that may attract more investor interest.
See More
TSMC Files 2025 Annual Report with SEC
- Annual Report Submission: TSMC today filed its 2025 annual report with the U.S. Securities and Exchange Commission, available on its website, reflecting the company's commitment to transparency and regulatory compliance.
- Technological Strength: By 2025, TSMC deployed 305 distinct process technologies and manufactured 12,682 products for 534 customers, showcasing its leadership and innovation capabilities in the semiconductor industry.
- Global Operations: TSMC's global operations across Asia, Europe, and North America support its role as the world's leading dedicated semiconductor foundry, fostering a thriving ecosystem for global customers and partners.
- Corporate Citizenship: As a global enterprise, TSMC is committed to fulfilling its corporate citizenship responsibilities, actively participating in social and environmental sustainability, thereby further solidifying its reputation in the industry.
See More
TSMC Reports Q1 Gross Margin of 66.2%, Exceeds Expectations
- Earnings Highlights: TSMC reported a net income of NT$572.48 billion ($18.14 billion) in Q1, surpassing Wall Street's estimate of NT$553.4 billion, showcasing the company's robust performance and solidifying its leadership in the semiconductor industry.
- Margin Guidance: The company forecasts a gross profit margin between 65.5% and 67.5% for Q2, reflecting effective strategies in cost control and balancing customer demand, potentially laying the groundwork for future profit growth.
- CapEx Plans: TSMC expects FY26 capital expenditures to reach the upper limit of $56 billion, indicating a strong commitment to expansion and technological investment aimed at meeting the surging AI demand and market competition.
- Positive Market Reaction: Needham raised TSMC's price target from $410 to $480, implying nearly a 32% upside, reflecting analysts' strong confidence in the company's future performance, despite the stock dropping over 2% in early trading.
See More
AMD Partners with Meta to Drive AI Growth
- Upward Revision: AMD revised its price target upward due to robust server demand driven by AI and high-performance computing, reflecting changing market trends and indicating the company's growth potential.
- Meta Partnership Agreement: AMD's agreement with Meta to supply up to six gigawatts of custom AI accelerators is set for a large-scale rollout in the latter half of 2026, further solidifying AMD's position in the AI infrastructure sector.
- Analyst Confidence Rebound: Bernstein raised AMD's price target from $235 to $265, signaling renewed confidence in the chipmaker's long-term prospects, particularly against the backdrop of strong demand in the server market.
- Global Expansion Plans: AMD signed a letter of intent with the French government to enhance France's AI ecosystem through a multi-year effort, thereby expanding its global AI footprint and strengthening digital capabilities.
See More
US Major Indices Rise in Late Morning Trading on Thursday
- Market Recovery: In late morning trading on Thursday, all three major US stock indices showed gains, reflecting investor optimism about market prospects, although specific gains were not disclosed.
- Improved Investor Sentiment: Influenced by economic data and corporate earnings, investor confidence has rebounded, driving the stock market higher and indicating expectations for future economic growth.
- Increased Trading Activity: As indices rise, market trading activity has noticeably increased, suggesting a positive response from investors to the current market environment, potentially signaling broader investment trends.
- Economic Data Impact: While specific data was not provided, heightened attention to upcoming economic indicators and corporate earnings reports may further influence index movements.
See More
TSMC and ASML Report Strong Earnings but Stocks Decline
- Record Profits for TSMC: TSMC reported a 58% year-over-year profit increase in Q1, reaching a new high, indicating robust demand for AI chips; however, its stock fell about 2%, reflecting market caution regarding future expectations.
- Rising Revenue from High-Performance Computing: The high-performance computing segment accounted for 61% of TSMC's total revenue in Q1, up from 55% in the previous quarter, highlighting the company's strengthened position in the AI market, despite an 11% decline in smartphone revenue.
- ASML Delivery Expectations: ASML anticipates delivering 80 low numerical aperture EUV machines in 2027, a figure that fell short of market expectations for 90 units, leading to a 3% drop in stock price following the earnings report.
- Increased Capital Expenditure Plans: TSMC expects capital expenditures to reach $52-$56 billion in 2026, significantly up from $40.5 billion in 2025, demonstrating the company's commitment to expanding advanced chip manufacturing capacity, although the market remains cautious about achieving its targeted 30% annual growth.
See More
TSMC Reports Strong Q1 Earnings Exceeding Expectations
- Earnings Beat: TSMC's Q1 GAAP EPS of $3.49 surpassed expectations by $0.11, indicating robust performance in the semiconductor market and likely boosting investor confidence moving forward.
- Significant Revenue Growth: The company reported Q1 revenue of $35.9 billion, a 40.6% year-over-year increase, exceeding market expectations by $410 million, reflecting strong global demand for high-performance computing and AI chips, driving sustained growth.
- Advanced Process Revenue Share: Shipments of 3nm, 5nm, and 7nm technologies accounted for 25%, 36%, and 13% of total wafer revenue, respectively, with advanced technologies (7nm and above) making up 74% of total revenue, showcasing TSMC's competitiveness in the high-end market.
- Optimistic Market Outlook: With ongoing demand for AI, TSMC is expected to continue reporting strong quarterly results, fostering a positive market sentiment that may attract more investor interest.
See More
TSMC Files 2025 Annual Report with SEC
- Annual Report Submission: TSMC today filed its 2025 annual report with the U.S. Securities and Exchange Commission, available on its website, reflecting the company's commitment to transparency and regulatory compliance.
- Technological Strength: By 2025, TSMC deployed 305 distinct process technologies and manufactured 12,682 products for 534 customers, showcasing its leadership and innovation capabilities in the semiconductor industry.
- Global Operations: TSMC's global operations across Asia, Europe, and North America support its role as the world's leading dedicated semiconductor foundry, fostering a thriving ecosystem for global customers and partners.
- Corporate Citizenship: As a global enterprise, TSMC is committed to fulfilling its corporate citizenship responsibilities, actively participating in social and environmental sustainability, thereby further solidifying its reputation in the industry.
See More
TSMC Reports Q1 Gross Margin of 66.2%, Exceeds Expectations
- Earnings Highlights: TSMC reported a net income of NT$572.48 billion ($18.14 billion) in Q1, surpassing Wall Street's estimate of NT$553.4 billion, showcasing the company's robust performance and solidifying its leadership in the semiconductor industry.
- Margin Guidance: The company forecasts a gross profit margin between 65.5% and 67.5% for Q2, reflecting effective strategies in cost control and balancing customer demand, potentially laying the groundwork for future profit growth.
- CapEx Plans: TSMC expects FY26 capital expenditures to reach the upper limit of $56 billion, indicating a strong commitment to expansion and technological investment aimed at meeting the surging AI demand and market competition.
- Positive Market Reaction: Needham raised TSMC's price target from $410 to $480, implying nearly a 32% upside, reflecting analysts' strong confidence in the company's future performance, despite the stock dropping over 2% in early trading.
See More
AMD Partners with Meta to Drive AI Growth
- Upward Revision: AMD revised its price target upward due to robust server demand driven by AI and high-performance computing, reflecting changing market trends and indicating the company's growth potential.
- Meta Partnership Agreement: AMD's agreement with Meta to supply up to six gigawatts of custom AI accelerators is set for a large-scale rollout in the latter half of 2026, further solidifying AMD's position in the AI infrastructure sector.
- Analyst Confidence Rebound: Bernstein raised AMD's price target from $235 to $265, signaling renewed confidence in the chipmaker's long-term prospects, particularly against the backdrop of strong demand in the server market.
- Global Expansion Plans: AMD signed a letter of intent with the French government to enhance France's AI ecosystem through a multi-year effort, thereby expanding its global AI footprint and strengthening digital capabilities.
See More
US Major Indices Rise in Late Morning Trading on Thursday
- Market Recovery: In late morning trading on Thursday, all three major US stock indices showed gains, reflecting investor optimism about market prospects, although specific gains were not disclosed.
- Improved Investor Sentiment: Influenced by economic data and corporate earnings, investor confidence has rebounded, driving the stock market higher and indicating expectations for future economic growth.
- Increased Trading Activity: As indices rise, market trading activity has noticeably increased, suggesting a positive response from investors to the current market environment, potentially signaling broader investment trends.
- Economic Data Impact: While specific data was not provided, heightened attention to upcoming economic indicators and corporate earnings reports may further influence index movements.
See More
TSMC and ASML Report Strong Earnings but Stocks Decline
- Record Profits for TSMC: TSMC reported a 58% year-over-year profit increase in Q1, reaching a new high, indicating robust demand for AI chips; however, its stock fell about 2%, reflecting market caution regarding future expectations.
- Rising Revenue from High-Performance Computing: The high-performance computing segment accounted for 61% of TSMC's total revenue in Q1, up from 55% in the previous quarter, highlighting the company's strengthened position in the AI market, despite an 11% decline in smartphone revenue.
- ASML Delivery Expectations: ASML anticipates delivering 80 low numerical aperture EUV machines in 2027, a figure that fell short of market expectations for 90 units, leading to a 3% drop in stock price following the earnings report.
- Increased Capital Expenditure Plans: TSMC expects capital expenditures to reach $52-$56 billion in 2026, significantly up from $40.5 billion in 2025, demonstrating the company's commitment to expanding advanced chip manufacturing capacity, although the market remains cautious about achieving its targeted 30% annual growth.
See More
